Bursa Malaysia Daily Market Report - 2 February

Transcription

1. Friday , 02 February, 2018 TA RESEARCH’S ‘DAILY COMPILED REPORTS’ For Internal Circulation Only N ew s 1. D ai l y M arke t C om men t a ry 2. D ai l y B ri ef Fu nd a me n tal Rep o r ts 1. 2. 3. 4. Ba n k i n g S e c t o r : 2 0 1 7 L o a n s a n d A dv a n c e s G re w b y 4 .1 % Y o Y L o t te C h e m ic a l T i t a n H o l d i n g B h d : Su s ta in e d S e q u e n t ia l M o m e n tu m & D iv id e n d Su rp r i se M a la ys i a n P a c if ic In d u s t r ie s Be r h a d : C o n c e rn s f ro m A g g ra v a tin g H e a d w in ds U S Ec o n o m y: F e d H o l d s I n te re s t R a te s a t Y e lle n ’s L a s t M e e t in g Te ch n ic al R ep o rt s 1. D ai l y Te ch n ic a l St o ck Pi cks ( L oc al ) Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. Kaladher Govindan – Head of Research TA SECURITIES HOLDINGS BERHAD (14948-M) A Participating Organisation of Bursa Malaysia Securities Berhad Menara TA One 22 Jalan P. Ramlee 50250 Kuala Lumpur Malaysia Tel: 603 – 2072 1277 Fax: 603 – 2032 5048 www.ta.com.my
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Daily Market Commentary Friday , 02 February 2018 For Internal Circulation Only TA Research, e-mail : taresearch@ta.com.my KLSE Market Statistics (30.01.2018) Volume Main Market 1,972.7 13.1 Warrants 687.5 236.4 ACE Market 584.9 0.3 Bond 7.3 0.0 ETF 1.7 1.4 LEAP 0.0 0.0 Total 3,254.1 Off Market 69.5 -88.5 2,697.4 97.1 93.5 1.9 2.2 0.0 2,892.1 477.0 Value 378.2 26.8 -7.7 -0.4 1.7 0.0 -28.4 Major Indices Index +/- chg Malaysia FBMKLCI FBMEMAS FBMSCAP February Futures Other Markets DOW JONES NASDAQ (US) FTSE (UK) NIKKEI (JAPAN) KOSPI (KOREA) HANG SENG (HK) FSSTI (S'PORE) SET (BANGKOK) JCI (JAKARTA) SHANGHAI SHENZHEN AUSTRALIA (mn) 20.4 10.0 7.1 5.2 5.1 5.0 3.0 2.1 2.0 1.6 1.5 1.2 % chg % YTD chg -1.94 -71.07 -238.26 -6.50 -0.10 -0.53 -1.38 -0.35 3.99 3.32 0.20 4.51 26,186.71 7,385.86 7,490.39 23,486.11 2,568.54 32,642.09 3,547.23 1,833.60 6,598.46 3,446.98 1,821.06 6,090.07 37.32 -25.62 -43.16 387.82 2.08 -245.18 13.24 6.74 -7.17 -33.85 -56.76 52.38 0.14 -0.35 -0.57 1.68 0.08 -0.75 0.37 0.37 -0.11 -0.97 -3.02 0.87 5.94 6.99 -2.57 3.17 4.10 9.10 4.24 4.56 3.82 4.23 -4.12 0.41 10.10 6.14 0.86 5.48 25.20 1.06 0.79 0.40 5.00 0.80 0.70 2.68 Exchange Rate USD/MYR 3.9005 0.019 USD/JPY 109.67 0.850 EUR/USD 1.243 -0.0014 Counter Mkt Cap. Chg (RM’mn) (RM) MAYBANK 109,165 TENAGA 89,409 DIGI 38,486 HLBANK 38,048 GENTING 36,840 PETGAS 35,419 GENM 31,210 KLK 26,858 PETDAG 24,459 PMETAL 22,327 -0.10 -0.06 -0.05 -0.06 -0.05 -0.52 -0.09 -0.04 -0.10 -0.02 Following the recent correction on Wall Street and with most blue chips still at elevated levels and overbought, expect an extended profit-taking correction which will be required to neutralize the short-term excesses. Immediate resistance for the index will be the recent high of 1,872, followed by the 150%FP at 1,888, subsequent to the all-time high of 1,896 on July 2014. Immediate uptrend supports are at the rising 10-day ma now at 1,843, the mid Bollinger band at 1,831, and then 1,800 and 1,796, the breakout level. News Bites Vol. (mn) 13.48 15.97 4.94 0.41 2.32 0.41 8.64 1.26 0.47 5.22 Commodities Futures Palm Oil (RM/mt) 2,490.00 -30.00 Crude Oil ($/Barrel) 65.98 1.21 Gold ($/tr.oz.) 1,351.90 7.50 Important Dates Stocks fell on Tuesday as investors took profits on recent strong gains after oil prices dipped and the ringgit eased following the overnight correction on Wall Street, which was sparked by concerns over rising interest rates which spread to the region. The KLCI shed 1.94 points to close at 1,868.58, off a high of 1,872.7 and low of 1,861.58, as losers trashed gainers 794 to 252 on higher turnover of 3.25bn shares worth RM2.89bn. Genting Berhad should attract buyers on weakness ahead of recovery to re-test the 26/4/17 peak (RM10.00), with a confirmed breakout to aim for the 123.6%FP (RM10.59) and 138.2%FP (RM10.95) going forward. Key retracement support from the 76.4%FR (RM9.41) is reinforced by the 100-day ma (RM9.35). Genting Malaysia needs convincing push above the 76.4%FR (RM5.92) to enhance upside momentum and target RM6.18 and the 25/5/17 peak (RM6.38) ahead, while key retracement support is at the 50%FR (RM5.40). Top 10 KLCI Movers Based on Mkt Cap. (RM) @ @ @ @ @ @ @ @ @ @ @ @ 469 238 82 4 1 0 794 1,868.58 13,371.86 17,084.76 1,865.50 Off Market MAYBANK TM ASIABRN SIMEPLT KLK SGB G3 SEAL MAGNI VERTICE G3-WA IJM Review & Outlook Value/ 1.37 151 0.14 76 0.16 20 0.26 2 1.27 3 0.00 0 0.89 252 6.86 • Maxis Bhd, Axiata Group Bhd, and Digi.Com Bhd have received a reissuance of the existing spectrum assignment in various bandwidths from the Malaysian Communications and Multimedia Commission. • Sunway Construction Group Bhd is forming a 49:51 joint venture (JV) with Singapore-listed Hong Leong Asia Ltd to jointly tender for the lease of a piece of land in Singapore from Singapore's Building and Construction Authority (BCA). • The Competition Commission of Singapore (CCS) has granted its clearance for Dutch coffee company Jacobs Douwe Egberts' (JDE) offer to privatise Oldtown Bhd. • Pavilion Real Estate Investment Trust (Pavilion REIT) has maintained an 8.24 sen income distribution per unit for 2017, similar to 2016, despite the current challenging environment. • Genetec Technology Bhd is partnering with several parties to collaborate on the development of an ammonia and urea manufacturing plant in India. • Ikhmas Jaya Group Bhd has won a contract valued at RM38.52mn from Mudajaya Corp Bhd to undertake subcontract bored piling works for the Light Transit Rail Line 3. • Pintaras Jaya Bhd has been awarded a contract worth RM68.5mn by Bina Puri Development Sdn Bhd for works related to a mixed development in Brickfields, Kuala Lumpur. • Salcon Bhd's indirect 60%-owned unit has secured an RM18.95mn contract from China State Construction Engineering (M) Sdn Bhd (CSCE) for a 20-month work order under a mixed development on Jalan Segambut. • The Federal Reserve held short-term interest rates steady and said it would continue along its path of gradual increases aimed at keeping the economy on track. • Growth in China's manufacturing sector held steady in January as production rose at the fastest. The Caixin-Markit manufacturing purchasing managers' index was unmoved from the previous month's reading at 51.5 in January. • The Nikkei-Markit Japan manufacturing purchasing managers' index rose to 54.8 in January from 54.0 in December. • Indonesian President Joko Widodo is still chasing some US$150bil to fund his ambitious nation-building agenda, almost halfway into a fiveyear infrastructure plan. • U.S. Nonfarm business-sector productivity decreased at a 0.1% seasonally adjusted annual rate in the fourth quarter of 2017. • UK IHS Markit/CIPS Purchasing Managers' Index for the manufacturing sector fell to 55.3 from 56.2 in December, survey data from IHS Markit showed. • Eurozone factory Purchasing Managers' Index dropped to a threemonth low of 59.6 in January from December's record high of 60.6. PDZ - 4:2 Rights Issue - RI of up to 434.7m shares together with up to 325.9m free detachable warrants. 4 rights shares together with 3 warrants for every 2 existing shares held, at an issue price of RM0.10 per rights share. LISTING ON: 07/02/2018. Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. Kaladher Govindan, Head of Research MENARA TA ONE, 22 JALAN for TA SECURITIES HOLDINGS BERHAD (14948-M) A PARTICIPATING ORGANISATION OF BURSA MALAYSIA SECURITIES BHD P RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL : 603 - 2072 1277. FAX : 603 - 2032 5048 www.ta.com.my
3. Friday , February 02, 2018 FBMKLCI: 1,868.58 xx THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Daily Brief Market View, News in Brief: Corporate, Economy, and Share Buybacks Chartist: Stephen Soo Tel: +603-2167 9607 stsoo@ta.com.my www.taonline.com.my M a r k e t V i e w Overbought Correction Needed Stocks fell on Tuesday as investors took profits on recent strong gains after oil prices dipped and the ringgit eased following the overnight correction on Wall Street, which was sparked by concerns over rising interest rates which spread to the region. The KLCI shed 1.94 points to close at 1,868.58, off a high of 1,872.7 and low of 1,861.58, as losers trashed gainers 794 to 252 on higher turnover of 3.25bn shares worth RM2.89bn. Uptrend Support at 1,843, Resistance at 1,872 Following the recent correction on Wall Street and with most blue chips still at elevated levels and overbought, expect an extended profit-taking correction which will be required to neutralize the short-term excesses. Immediate resistance for the index will be the recent high of 1,872, followed by the 150%FP at 1,888, subsequent to the all-time high of 1,896 on July 2014. Immediate uptrend supports are at the rising 10-day ma now at 1,843, the mid Bollinger band at 1,831, and then 1,800 and 1,796, the breakout level. BUY Genting Bhd & Genting Malaysia Genting Berhad should attract buyers on weakness ahead of recovery to re-test the 26/4/17 peak (RM10.00), with a confirmed breakout to aim for the 123.6%FP (RM10.59) and 138.2%FP (RM10.95) going forward. Key retracement support from the 76.4%FR (RM9.41) is reinforced by the 100-day ma (RM9.35). Genting Malaysia needs convincing push above the 76.4%FR (RM5.92) to enhance upside momentum and target RM6.18 and the 25/5/17 peak (RM6.38) ahead, while key retracement support is at the 50%FR (RM5.40). Most Asian Markets Higher as Fed Kept Rates Steady Asian markets ended mostly higher on Thursday after stocks in the region sold off earlier this week. Stocks in greater China, however, underperformed their regional peers. The benchmark Nikkei 225 index surged 1.68 percent, or 387.82 points, to close at 23,486.11, snapping a six-day losing streak. In South Korea, the Kospi edged up 0.08 percent to end at 2,568.54. Over in Sydney, the S&P/ASX 200 gained 0.87 percent to finish the session at 6,090.1 on broad based strength across most sectors. The heavily weighted financials and materials sectors were up 1.15 percent and 1.05 percent, respectively. Oil stocks were also higher after crude continued its recovery. Mainland indexes showed declines: The Shanghai composite fell 0.99 percent to close at 3,446.24, despite gains seen in major banks: Industrial and Commercial Bank of China closed up 2.67 percent. The Shenzhen composite tumbled 3 percent by the end of the day and the blue chip CSI 300 was lower by 0.71 percent. The fall in Chinese stocks came despite the release of China Caixin manufacturing purchasing managers' index, which topped expectations. The Federal Reserve announced Wednesday it was holding rates steady, a move that was widely expected. The Federal Open Market Committee also said it expected inflation pressure to pick up as the year progressed. Page 1 of 9
4. 2-Feb-18 US Stocks End Lower in Choppy Session as Higher Yields Snuff Out Rally U .S. equities pulled back on Thursday as investors worried about rising interest rates. The benchmark 10-year yield rose to trade at 2.79 percent, while the 30-year bond yield topped 3 percent for the first time since May. Stocks were under pressure earlier after the release of weaker-than-expected productivity numbers, which theoretically signifies higher inflation. The U.S. government said in a preliminary report that fourth-quarter productivity fell 0.1 percent. Economists polled by Reuters expected a gain of 1 percent. Wall Street also looked ahead to the release of the U.S. government's monthly jobs report. Economists polled by Reuters expect the economy to have added 180,000 jobs. The U.S. economy has been doing well recently, with key data pointing to further growth. On Thursday, the Atlanta Fed GDPNow forecast for the first quarter of 2018 rose to 5.4 percent from 4.2 percent. The S&P 500 declined 0.1 percent to close at 2,821.98 after rising as much as 0.4 percent. The Nasdaq composite fell 0.4 percent to 7,385.86. Earlier, the tech heavy index traded 0.4 percent higher as Facebook shares hit an all-time high. The Dow Jones industrial average closed 37.32 points higher at 26,186.71. It rose as much as 157.31 points and traded as much as 134.95 points lower. Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. As of Friday, February 02, 2018, the chartist, Stephen Soo, who prepared this report, has interest in the following securities covered in this report: (a) nil Kaladher Govindan – Head of Research TA SECURITIES HOLDINGS BERHAD (14948-M) A Participating Organisation of Bursa Malaysia Securities Berhad Menara TA One 22 Jalan P. Ramlee 50250 Kuala Lumpur Malaysia Tel: 603 – 2072 1277 Fax: 603 – 2032 5048 www.ta.com.my Page 2 of 9
5. 2-Feb-18 N e w s i n B r i e f Corporate Maxis Bhd , Axiata Group Bhd, and Digi.Com Bhd have received a reissuance of the existing spectrum assignment in various bandwidths from the Malaysian Communications and Multimedia Commission. Their offers are subject to a price component payment of RM118.4mn and an annual fixed fee payment of RM50mn payable throughout the assignment period. Each spectrum assignment is for a period of 16 years effective April 2, 2018. Axiata, received its spectrum assignment in the 1950 MHz to 1965MHz and 2140 MHz to 2155MHz band. Digi, meanwhile, accepted the offer of reissuance of its 2100 MHz spectrum assingment at 2X15MHz. Maxis' assignment was for the 2100 MHz spectrum comprising 2 x 15MHz and 1 x 5MHz (StarBiz). Sunway Construction Group Bhd (SunCon) is forming a 49:51 joint venture (JV) with Singapore-listed Hong Leong Asia Ltd to jointly tender for the lease of a piece of land in Singapore from Singapore's Building and Construction Authority. If successful, the two companies plan to develop the land for the manufacture and sale of precast concrete building components. SunCon said it will also benefit from the proposed JV in the long run through productivity improvement and reduced reliance on foreign workers, but did not elaborate (The Edge). QSR Brands (M) Holdings Bhd plans to open over 35 new KFC outlets nationwide this year with investments of over RM100mn. The company would spend between RM3mn and RM4mn for each outlet. According to management, the group has the financial and operation capacity as well as the commitment of shareholders to expand its business this year, in line with the country's strong economic growth (StarBiz). The Competition Commission of Singapore (CCS) has granted its clearance for Dutch coffee company Jacobs Douwe Egberts’ (JDE) offer to privatise Oldtown Bhd, thus fulfilling all preconditions needed for a takeover offer to be made. JDE first made an offer to buyout Oldtown at RM3.18 per share or RM1.47bn. In order to privatise Oldtown, JDE required a total stake of at least 90%, along with approvals from the CCS and any other antitrust regulators (StarBiz). Pavilion Real Estate Investment Trust (Pavilion REIT) has maintained an 8.24 sen income distribution per unit for 2017, similar to 2016, despite the current challenging environment. Pavilion REIT saw its income before tax reduced to RM249.4mn from RM312.1mn in 2016, as only RM17mn of its gains from investment properties was recognised in 2017 compared with RM76.9mn previously (Bursa Malaysia). Amcorp Properties Bhd and its joint-venture partner, Grosvenor Europe Investments Limited, have acquired a residential development project in the sought-after Chamberi district in Madrid, Spain. The 333-square metre residential development site located on Garcia de Paredes Street is within walking distance to the popular Canal de Isabel II Park and Canal Theatre as well as close to the Canal Metro Station. The JV will develop 15 exclusive apartments and two penthouses set in a seven-storey building in consultation with the prestigious architectural firm, Cano Y Escario (Bernama). Salcon Bhd’s indirect 60%-owned unit has secured a RM18.95mn contract from China State Construction Engineering (M) Sdn Bhd for a 20-month work order under a mixed development on Jalan Segambut. The project involves the construction of two blocks of service apartments, related facilities, one guard house, and one unit of electrical substation (The Edge). Genetec Technology Bhd is partnering with several parties to collaborate on the development of an ammonia and urea manufacturing plant in India. The group has signed a Memorandum of Understanding (MoU) with the Malay Chamber of Commerce Malaysia, China Rainbow International Investment Co Ltd and India-based VBC Fertilisers & Chemicals Ltd for the proposed development. The MoU, provides the opportunity for the group to provide its system automation solutions and services within the project scope (Bursa Malaysia). Page 3 of 9
6. 2-Feb-18 Ecofirst Consolidated Bhd ’s net profit for the quarter ended Nov 30, 2017 rose over five-fold to RM27.52mn from RM5.23mn a year ago, thanks to higher contribution from its property development division, and a land sale worth RM28.4mn. Quarterly revenue more than tripled to RM40.43 mn from RM12.07 mn previously, mainly from two property development projects — Liberty @Ampang Ukay and Upper East @Tiger Lane, Ipoh (The Edge). Ikhmas Jaya Group Bhd has won a contract valued at RM38.52mn from Mudajaya Corp Bhd to undertake subcontract bored piling works for the Light Transit Rail Line 3. The contract involves the LRT3 package from Bandar Utama to Johan Setia and includes the guideway, station, park and ride, ancillary buildings and other associated works for the project delivery partner MRCB George Kent Sdn Bhd (StarBiz). Pintaras Jaya Bhd has been awarded a contract worth RM68.5mn by Bina Puri Development Sdn Bhd for works related to a mixed development in Brickfields, Kuala Lumpur. The job scope entails piling and substructure works for a proposed development comprising 54 levels of office suites, two blocks of 63 levels of service apartments, food court, commercial lots and car parks (The Edge). Malaysia Building Society Bhd announced its pre-tax profit for the financial year ended Dec 31, 2017 surged 62.74% to RM550.73mn from RM338.42mn in FY16. The substantial increase in profit was mainly attributed to the lower cost of funds and lower allowances for the impairment losses on financing, loans and advances (Bernama). WZ Satu Bhd’s net profit in the quarter ended Nov 30, 2017 slumped 94% to RM497,000 from RM8.5mn a year ago, mainly due to weaker results in the mining and civil engineering and construction segments, and losses incurred by its associates, which offset higher revenue in the period. Its profit before taxation declined by RM8.9mn to RM1.4mn from the previous year's corresponding quarter of RM10.3mn (The Edge). Perusahaan Sadur Timah Malaysia Bhd saw its profit fall 76% in its third quarter ended Dec 31, 2017 to RM3.4mn from RM14.16mn a year ago, no thanks to lower profit margins and sales volume. Quarterly revenue, however, was up 0.4% to RM233.89mn from RM233.04mn, as higher average selling price made up for the lower sales volume (Bursa Malaysia). Page 4 of 9
7. 2-Feb-18 N e w s I n B r i e f Economy Asia China Manufacturing Growth Steady in January : Caixin Growth in China’s manufacturing sector held steady in January as production rose at the fastest pace in more than one year, according to a private survey. The Caixin-Markit manufacturing purchasing managers’ index was unmoved from the previous month’s reading at 51.5 in January, remaining firmly above the 50-point line separating expansion from contraction. A sub-index tracking of output growth rose to its highest since December 2016 as companies reported improving demand and more new work. Total new orders notched a nineteenth consecutive month of growth but at a slower pace than the previous month as new export sales growth also softened. Input cost inflation eased to a five-month low with companies pointing to higher raw material costs for materials including metals and packaging. Factory gate charges edged up. Employment declined again in January as companies downsized, but the rate of job losses was the weakest in almost two years, the survey found. (Financial Times) Japan Manufacturing PMI Rises for Third Consecutive Month Japan’s manufacturing sector’s strong momentum carried through into 2018, growing at its fastest pace in almost four years in January. The Nikkei-Markit Japan manufacturing purchasing managers’ index rose to 54.8 in January from 54.0 in December. New order growth rose for a third consecutive month to a four-year high as new business from overseas notched the fastest rate of growth since May 2010. In turn, positive sentiment for future output hit a four-month high prompting manufacturers to hire more staff. Rising commodity prices pushed up input prices pressuring companies to raise output prices by the greatest extent since October 2008. (Financial Times) Australia Building Approvals Tumble 20.0% in December The total number of building permits issued in Australia plummeted a seasonally adjusted 20.0% on month in December, the Australian Bureau of Statistics said - standing at 16,891. That missed forecasts for a decline of 7.6% following the upwardly revised 12.6% spike in November (originally 11.7%). On a yearly basis, building permits sank 5.5% - again missing expectations for an increase of 11.5% following the upwardly revised 18.1% surge in the previous month (originally 17.1%). Approvals for private sector houses gained 1.0% on month and 5.5% on year to 9,904. Approvals for private sector dwellings excluding houses plunged 39.2% on month and 18.4% on year to 6,807. Dwelling approvals decreased in the Australian Capital Territory (35.0%), the Northern Territory (12.9%), New South Wales (5.6%), South Australia (2.4%), Western Australia (1.3%) and Queensland (0.8%), but increased in Tasmania (3.1%) and Victoria (2.5%). The value of total building approved fell 17.8% in December. The value of residential building plummeted 25.4% and the value of non-residential building dipped 3.4%. Other news in Australia: The ABS said that export prices in Australia were up 2.8% on quarter in the fourth quarter of 2017. That beat forecasts for an increase of 2.0% following the 3.0% decline in the three months prior. The manufacturing sector in Australia continued to expand in January, and at a faster rate, the latest survey from the Australian Industry Group showed with a Performance of Manufacturing Index score of 58.7. Page 5 of 9
8. 2-Feb-18 Indonesia Still Chasing US $150bil Budget Shortfall Indonesian President Joko Widodo is still chasing some US$150bil to fund his ambitious nation-building agenda, almost halfway into a five-year infrastructure plan. The government has so far received pledges for just over half the funds needed to help develop the road, airport and railway projects planned in a US$327bil pipeline, latest government figures show. Just US$15bil has come from the state budget, with the bulk committed by private investors, including from China. Widodo, known as Jokowi, needs outside money for his nation-building programme after government revenue was battered by the end of the commodities boom and as tax compliance remains poor. With China making a massive push to build infrastructure and new trade routes across Asia through its Belt and Road Initiative, the world’s second-largest economy looms large as an obvious backer for Jokowi’s plans. “In reality, there is only a handful of countries with a surplus of money,” Rainier Haryanto, the programme director of the Indonesian government’s Committee to Accelerate Priority Infrastructure, said in an interview in Jakarta. “The US, they are in debt. The Japanese, they are also in debt,” he said, but the Chinese have the money to lend. “At the end of the day, cash is king.” (The Star) United States U.S. Worker Productivity Slips in Final Months of 2017 U.S. worker productivity stumbled at the end of 2017 after solid gains earlier in the year. Nonfarm business-sector productivity, measured as the goods and services produced per hour worked, decreased at a 0.1% seasonally adjusted annual rate in the fourth quarter of 2017, the Labor Department said Thursday. It was the first quarterly decline since early 2016. Economists surveyed by The Wall Street Journal had expected a 0.6% growth rate for the latest quarter. The productivity decrease reflected a less robust increase in output and a strong gain in hours worked. Productivity growth in the third quarter was revised down to a 2.7% rate an earlier estimate of up 3%. For all of 2017, productivity improved 1.2% from the prior year. That matched the average rate recorded from 2007 through 2017, and is well below the 2.1% annual rate averaged since 1947. Weak productivity gains may have made it difficult for businesses to justify larger pay increases for workers last year. If individual workers can’t produce more, firms may opt to add more employees rather than give current staff raises. That’s consistent with recent solid hiring and sluggish wage gains. Productivity in the third quarter had accelerated to the best pace since early 2015. That coincided with the best rate of economic growth--3.2%--since 2014. Last quarter, gross domestic product expanded at a 2.6% annual rate, the Commerce Department said last week. (The Wall Street Journal) U.S. Jobless Claims Fell Last Week The number of Americans filing applications for new unemployment benefits fell last week, remaining near historically low levels. Initial jobless claims, a proxy for layoffs across the U.S., declined by 1,000 to a seasonally adjusted 230,000 in the week ended Jan. 27, the Labor Department said Thursday. Economists surveyed by The Wall Street Journal expected 235,000 new claims last week. Jobless claims data can be volatile week-to-week, especially at the turn of the year. Claims have risen five out of the past seven weeks, but also hit a nearly 45-year low in January. The four-week moving average, a steadier measure, declined 5,000 to 234,500 last week. Analysts said recent movement reflects exaggerated seasonal volatility typical of the holiday season. Weekly jobless claims have held below a healthy 300,000 for about three years, the longest streak since the 1970s. The number of claims workers made for longer than a week increased, rising to 1,953,000 in the week ended Jan. 20; continuing claims are released with a one-week lag. (The Wall Street Journal) Page 6 of 9
9. 2-Feb-18 Fed Holds Rates Steady , Sees ‘Solid’ Economic Gains The Federal Reserve held short-term interest rates steady and said it would continue along its path of gradual increases aimed at keeping the economy on track. The rate-setting Federal Open Market Committee, in a statement released after its policy meeting, offered nothing to dispel market expectations that it would deliver its next rate increase in March. Such a move would extend the central bank’s pattern, since December 2016, of announcing steps to remove economic stimulus at every other meeting. Fed officials are hoping to keep rates low enough to encourage inflation to firm up a bit without surging out of control, amid a tight labor market and solid economic growth. he policy gathering was the last attended by Chairwoman Janet Yellen before she turns over the reins to her successor, Fed governor Jerome Powell. The Fed said Mr. Powell will begin his term as FOMC chairman on Saturday and is scheduled to be sworn in as chairman of the Fed board of governors on Monday. Investors placed the probability of a rate increase at the March 20-21 meeting at around 78% before the policy statement was released, according to CME Group. A bigger question looming over Wednesday’s meeting centered on how officials’ outlook on the economy had evolved since they met in December, when they raised their benchmark short-term rate to a still-low range between 1.25% and 1.5% and penciled in three increases for 2018. Officials voted unanimously Wednesday to leave the benchmark rate in that range. (The Wall Street Journal) Trump's Statements on US Economy: Some Hits, Some Misses President Donald Trump used his State of the Union address in part to take credit for the strength of the U.S. economy and financial markets, something he does regularly. Some of his claims were spot on; some were not. Here are some of Trump's statements about the economy. Trump said since the 2016 election, 2.4 million new jobs were created, a claim that has validity. The economy did add an average of 171,000 positions per month in 2017. It has been doing that, however, since 2010, a record run of job creation that makes it hard to distinguish between the momentum developed under Trump and his predecessor, President Barack Obama. Strictly on a calendar basis, for Obama’s two presidential terms running from January 2009 through December 2016, the economy added 109,000 jobs per month. But he inherited an economic mess. The United States began losing jobs consistently in early 2008, at the end of President George W. Bush's administration, and by the time Obama took over, it was hemorrhaging hundreds of thousands of jobs a month. The recession officially ended in June 2009, and from that point to the end of Obama’s second term, job growth was 159,000 per month, less than during Trump’s first year. The jobs market did not reach its low point until February 2010. From that point to the end of Obama’s second term, job growth averaged 190,000 per month, more than Trump’s first year. (The Star) U.S. Private Sector Added 234,000 Jobs in January Hiring at private U.S. employers grew more than expected in January, according to a report. Firms across the country added 234,000 workers in January, according to payroll processor Automatic Data Processing Inc. and forecasting firm Moody’s Analytics. Economists surveyed by The Wall Street Journal had expected the addition of 193,000 jobs. Service providers were firing on all cylinders, posting their strongest gain in more than a year. The December figure was revised down to 242,000 from 250,000. The ADP report is based on privatepayroll data in addition to government data. Still, the report raised concerns over employee shortages given the unemployment rate. The job market juggernaut marches on. If it falls short, it is likely because businesses can’t find workers to fill all the open job positions. Growth was driven by midsize and large companies while job growth at smaller firms slowed slightly. The ADP report comes ahead of the monthly jobs report from the U.S. Bureau of Labor Statistics on Friday. Economists expect nonfarm jobs to rise by 177,000 for January, compared with 148,000 the prior month. (The Wall Street Journal) Page 7 of 9
10. 2-Feb-18 Europe and Uni ted Kingdom UK Manufacturing Growth Unexpectedly Slows in January UK manufacturing logged further easing at the start of 2018 , falling to its lowest level since June last year, but sustained its robust momentum. The IHS Markit/CIPS Purchasing Managers' Index for the manufacturing sector fell to 55.3 from 56.2 in December, survey data from IHS Markit showed. Economists had predicted a score of 56.5. A PMI score above 50 suggests growth in the sector. The pace of growth in new orders and output slowed further, while price pressures accelerated. The trend in demand will need to strengthen in the near-term to prevent further growth momentum being lost in the coming months. Price trends will be watched closely to see if the upsurge is simply a one off spike or something more embedded. (Markit Economics) British PM May Says Will Give Parliament 'Appropriate Analysis' Before Brexit Deal Vote British Prime Minister Theresa May said that lawmakers would be given official analysis on any Brexit deal before they are asked to approve it, dismissing a leaked document showing the economy would be worse off under all exit scenarios. Buzzfeed News reported that Britain's economy would be worse off whether it leaves the European Union with a free trade deal, single market access, or with no deal at all, citing a government analysis. But May said the report was a "selective interpretation of a very preliminary analysis, which ministers have not signed off". She said lawmakers would be given analysis on the actual deal that Britain reaches with the European Union ahead of a vote which will allow lawmakers to accept or reject the negotiated settlement. "When the time comes for parliament to vote on the final deal, we will ensure that parliament has the appropriate analysis on which to be fully informed, on which to base their judgement," May told reporters travelling to China for a trade visit. The parliamentary vote is a potential flashpoint in the Brexit process. No date is yet scheduled, but it will take place after the final divorce terms have been agreed. (The Star) Eurozone Manufacturing Growth Remains Elevated in January Eurozone manufacturing activity expanded markedly at the start of the year, driven by solid expansions of both production and new orders, survey data from IHS Markit showed. The final factory Purchasing Managers' Index dropped to a three-month low of 59.6 in January from December's record high of 60.6. However, any reading above 50 indicates expansion in the sector. Manufacturers indicated that they were experiencing solid inflows of new business from both the domestic and export markets during January. Output grew at one of the fastest rates recorded over the survey's 20-year history, matched by a further nearrecord surge in new orders. Manufacturing employment rose for the forty-first successive month and the rate of jobs growth remained substantial during the month. Germany's IHS Markit/BME manufacturing PMI dropped to a 3-month low of 61.3 in January from 63.3 in December. (Markit Economics) Page 8 of 9
11. 2-Feb-18 Share Buy-Back : 30 January 2018 Company GENM GLOMAC HEVEA MALAKOF NPC SNTORIA UNIMECH YILAI Bought Back Price (RM) 100,000 5,000 50,000 655,000 1,000 160,000 10,000 3,000 5.50/5.47 0.53 1.00 0.94/0.935 1.90 0.625/0.62 1.05/1.04 0.75 Total Treasury Shares 5.60/5.47 273,957,400 0.53/0.52 5,433,400 1.03/0.995 972,000 0.95/0.925 7,776,800 1.90/1.82 3,115,700 0.625/0.615 2,261,000 1.05/1.04 6,593,410 0.75 7,914,408 Source: Bursa Malaysia Hi/Lo (RM) Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. Kaladher Govindan – Head of Research TA SECURITIES HOLDINGS BERHAD (14948-M) A Participating Organisation of Bursa Malaysia Securities Berhad Menara TA One 22 Jalan P. Ramlee 50250 Kuala Lumpur Malaysia Tel: 603 – 2072 1277 Fax: 603 – 2032 5048 www.ta.com.my Page 9 of 9
12. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company Share Price Target Price (RM) (RM) Recom Market Cap. (RMm) BETA EPS (sen) FY18 FY19 PER (X) FY18 FY19 Div Yield (%) FY18 FY19 52weeks 52weeks % Chg High Price % Chg Low Price % Chg YTD 29-Jan-18 AUTOMOBILE BAUTO 2.24 2.50 Buy 2,595 0.48 14.3 19.9 15.6 11.2 5.1 5.4 2.47 -9.3 1.84 21.7 MBMR 2.39 2.32 Under Review 934 0.70 23.2 23.9 10.3 10.0 1.9 2.0 2.60 -8.1 2.01 18.9 1.8 8.6 PECCA 1.50 1.86 Buy 277 na 11.1 12.5 13.5 12.0 3.7 4.1 1.70 -11.8 1.28 17.2 -3.2 SIME 3.06 1.97 Hold 20,811 1.49 12.0 12.7 25.6 24.2 1.0 1.0 3.06 0.0 2.03 51.0 38.5 UMW 6.82 4.37 Sell 7,968 1.35 20.7 36.9 33.0 18.5 1.5 2.6 6.98 -2.3 4.70 45.1 31.2 BANKS & FINANCIAL SERVICES ABMB 4.33 4.60 Hold 6,703 1.30 30.6 35.6 14.2 12.2 3.7 3.7 4.49 -3.6 3.62 19.6 6.1 AFFIN 2.53 2.70 Hold 4,916 0.93 24.2 28.1 10.4 9.0 3.2 3.2 2.98 -15.0 2.22 13.9 9.5 AMBANK 4.82 5.50 Buy 14,528 1.36 48.6 52.0 9.9 9.3 3.7 3.7 5.70 -15.4 4.06 18.7 9.3 CIMB 7.25 7.50 Hold 66,885 1.57 50.8 56.0 14.3 12.9 4.0 3.9 7.36 -1.5 4.91 47.7 10.9 HLBANK 18.60 19.30 Hold 38,048 0.72 114.2 120.9 16.3 15.4 2.4 2.4 18.68 -0.4 13.18 41.1 9.4 MAYBANK 10.10 10.50 Hold 109,165 1.05 70.9 77.7 14.3 13.0 5.0 5.0 10.24 -1.4 8.12 24.4 3.1 PBBANK 21.98 25.10 Buy 84,876 0.65 142.4 149.8 15.4 14.7 2.6 2.7 22.38 -1.8 19.66 11.8 5.8 RHBBANK 5.44 5.70 Hold 21,815 1.61 52.2 53.8 10.4 10.1 2.8 2.8 5.59 -2.7 4.71 15.5 8.8 BURSA 10.90 11.10 Buy 5,859 0.94 39.0 41.5 28.0 26.3 3.1 3.1 10.98 -0.7 8.08 34.9 7.7 Note: BURSA proposed bonus issue of shares on the basis of 1 for 2. Ex-Target price RM7.04 CONSTRUCTION GADANG 1.16 1.69 Buy 766 1.09 14.3 18.2 8.1 6.4 2.6 2.6 1.37 -15.3 1.01 14.9 4.5 GAMUDA 5.12 6.00 Buy 12,576 0.85 34.5 35.7 14.8 14.4 2.3 2.3 5.52 -7.2 4.58 11.8 3.2 IJM 3.09 2.89 Sell 11,212 0.89 13.7 18.2 22.5 17.0 3.1 3.1 3.61 -14.4 2.71 14.0 1.3 PESONA 0.45 0.55 Buy 313 0.91 5.8 4.8 7.8 9.4 3.3 3.3 0.74 -38.8 0.44 3.4 0.0 SENDAI 0.77 0.55 Sell 597 1.21 9.1 8.5 8.4 9.0 1.3 1.3 1.39 -45.0 0.51 51.5 -11.6 SUNCON 2.56 2.65 Buy 3,308 0.61 14.7 16.4 17.4 15.6 2.1 2.3 2.64 -3.0 1.68 52.4 2.0 WCT 1.56 1.64 Hold 2,195 0.95 12.6 11.2 12.3 14.0 1.9 1.9 2.48 -37.0 1.46 6.8 -3.7 LITRAK 5.74 6.26 Hold 3,029 0.36 45.6 47.1 12.6 12.2 4.4 4.4 6.15 -6.7 5.40 6.3 3.4 ANNJOO 3.49 4.40 Buy 1,800 1.34 45.3 49.2 7.7 7.1 6.3 7.4 3.98 -12.3 2.27 53.7 -9.6 CHINHIN 1.15 1.36 Buy 640 1.07 12.4 12.0 9.2 9.5 4.3 5.2 1.49 -22.8 0.88 30.7 -5.0 ENGTEX 1.09 1.38 Buy 464 0.69 14.2 16.1 7.7 6.8 3.8 5.0 1.52 -28.3 1.07 1.9 -0.9 CARLSBG 15.94 18.06 Buy 4,903 0.78 86.2 88.7 18.5 18.0 5.4 5.5 16.00 -0.4 13.94 14.3 4.2 HEIM 19.10 19.14 Buy 5,770 0.48 84.0 88.3 22.7 21.6 4.0 4.2 19.58 -2.5 15.78 21.0 1.1 AEON 1.64 1.97 Sell 2,303 0.39 6.7 7.7 24.5 21.3 2.4 2.7 2.70 -39.3 1.61 1.9 -6.8 AMWAY 7.90 8.18 Buy 1,299 0.44 43.9 45.2 18.0 17.5 4.8 5.1 8.18 -3.4 7.04 12.2 7.0 F&N 29.16 28.55 Hold 10,688 0.21 155.7 182.7 18.7 16.0 2.1 2.2 29.20 -0.1 22.64 28.8 8.0 Building Materials CONSUMER Brewery Retail HUPSENG 1.10 1.25 Hold 880 0.44 5.4 5.6 20.2 19.8 4.1 4.5 1.28 -14.1 1.08 1.9 0.9 JOHOTIN 1.31 1.75 Buy 407 0.75 12.8 13.5 10.2 9.7 3.8 4.1 1.76 -25.6 1.16 12.9 8.3 NESTLE 113.30 120.50 Buy 26,569 0.45 330.1 373.8 34.3 30.3 2.6 3.0 114.10 -0.7 75.40 50.3 9.8 PADINI 5.09 4.67 Sell 3,349 0.76 27.0 30.0 18.9 17.0 2.5 2.6 5.50 -7.5 2.35 116.6 -3.6 POHUAT 1.56 2.01 Buy 343 0.78 23.0 25.5 6.8 6.1 5.1 5.1 2.07 -24.6 1.49 4.7 -12.8 QL 4.80 3.26 Sell 7,788 0.43 12.8 14.7 37.4 32.6 0.9 1.0 4.84 -0.8 3.26 47.4 10.3 SIGN 0.65 0.92 Buy 149 0.92 6.9 9.2 9.4 7.1 3.8 5.4 1.07 -39.3 0.65 0.0 -7.8 34.18 52.08 Buy 9,759 1.40 187.4 175.4 18.2 19.5 5.9 5.9 51.04 -33.0 31.40 8.9 -14.6 GENTING 9.63 11.53 Buy 36,840 1.46 54.4 59.8 17.7 16.1 1.7 1.7 10.00 -3.7 8.13 18.4 4.7 GENM 5.51 6.51 Buy 31,210 1.54 27.0 30.6 20.4 18.0 1.6 1.8 6.38 -13.6 4.87 13.1 -2.1 2.26 3.34 Buy 3,044 0.70 21.5 26.0 10.5 8.7 7.1 8.0 3.00 -24.7 2.23 1.3 0.9 CCMDBIO 2.78 2.70 Buy 776 0.88 15.0 16.1 18.5 17.3 3.6 3.7 3.03 -8.3 1.97 41.1 9.9 IHH 6.01 6.40 Buy 49,520 0.77 11.9 15.0 50.6 40.2 0.5 0.6 6.35 -5.4 5.42 10.9 2.6 KPJ 0.97 1.12 Buy 4,137 0.49 3.8 4.2 25.6 23.0 2.2 2.4 1.14 -14.9 0.90 7.8 0.0 HARTA 11.80 7.30 Sell 19,504 1.17 25.8 30.5 45.7 38.7 1.0 1.2 12.18 -3.1 4.63 154.9 10.5 KOSSAN 8.65 8.80 Buy 5,531 0.45 38.3 43.0 22.6 20.1 2.2 2.5 8.79 -1.6 5.62 53.9 6.7 SUPERMX 2.19 1.80 Sell 1,436 0.73 15.3 17.9 14.3 12.2 2.4 2.8 2.50 -12.4 1.69 29.6 9.5 TOPGLOV 9.27 9.35 Sell 11,640 0.55 41.6 50.8 22.3 18.2 1.5 1.9 10.00 -7.3 4.56 103.3 16.0 KAREX 1.15 1.00 Sell 1,153 0.64 2.8 5.2 41.6 22.1 0.6 1.1 2.47 -53.4 1.14 0.9 -11.5 SCIENTX 8.75 9.84 Buy 4,278 0.66 68.2 74.9 12.8 11.7 2.4 3.0 9.85 -11.2 6.89 27.0 1.0 SKPRES 1.96 2.20 Hold 2,450 0.62 10.4 14.8 18.9 13.3 2.6 3.8 2.35 -16.6 1.24 58.1 -14.0 ASTRO 2.60 3.10 Buy 13,556 0.91 14.0 13.7 18.6 19.0 5.0 5.2 2.94 -11.6 2.45 6.1 -1.9 MEDIA PRIMA 0.68 0.45 Sell 754 1.20 -3.8 -1.7 na na 0.0 0.0 1.28 -46.9 0.58 17.2 -10.5 STAR 1.39 1.25 Sell 1,026 1.13 6.7 6.7 20.7 20.7 8.6 8.6 2.22 -37.3 1.31 6.1 -15.8 Tobacco BAT GAMING Casino NFO BJTOTO HEALTHCARE Hospitals/ Pharmaceutical Rubber Gloves INDUSTRIAL MEDIA
13. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company Share Price Target Price (RM) (RM) Recom Market Cap. (RMm) BETA EPS (sen) FY18 FY19 PER (X) FY18 FY19 Div Yield (%) FY18 FY19 52weeks 52weeks % Chg High Price % Chg Low Price % Chg YTD OIL & GAS DNEX 0.48 0.72 Buy 843 1.45 4.2 4.5 11.4 10.6 2.1 2.1 0.69 -30.4 0.28 74.5 -1.0 LCTITAN 5.36 6.10 Buy 12,183 na 56.3 60.9 9.5 8.8 4.7 5.0 6.53 -17.9 4.14 29.5 14.0 MHB 0.80 0.78 Sell 1,272 1.80 -0.5 0.3 na 234.2 0.0 0.0 1.16 -31.5 0.63 27.2 -3.6 MISC 7.55 6.56 Sell 33,702 1.11 46.8 52.3 16.1 14.4 4.0 4.0 7.90 -4.4 6.89 9.6 1.8 PANTECH 0.66 0.69 Buy 488 1.13 6.1 6.8 10.8 9.6 4.2 4.7 0.74 -11.5 0.45 45.6 1.6 PCHEM 8.14 8.05 Hold 65,120 0.95 49.8 52.6 16.4 15.5 2.7 2.8 8.28 -1.7 6.80 19.7 5.7 SAPNRG 0.76 1.25 Buy 4,524 2.16 -6.5 -4.9 na na 0.0 0.0 2.10 -64.0 0.67 13.5 6.3 SERBADK 3.46 3.40 Sell 5,081 na 25.7 27.8 13.4 12.4 2.2 2.4 3.66 -5.5 1.51 129.1 6.8 UMWOG 0.33 0.51 Buy 2,670 1.73 0.4 1.2 80.4 26.2 0.0 0.0 0.70 -53.8 0.27 20.4 6.6 UZMA 1.49 1.56 Sell 477 1.01 13.1 14.2 11.4 10.5 0.0 0.0 1.98 -24.7 1.26 18.3 16.4 FGV 2.01 2.01 Sell 7,333 1.50 3.7 4.5 54.3 44.2 2.5 2.5 2.18 -7.8 1.51 33.1 18.9 IJMPLNT 2.40 2.69 Sell 2,113 0.18 9.1 12.5 26.3 19.1 3.3 3.8 3.60 -33.3 2.39 0.4 -12.4 IOICORP 4.69 4.12 Sell 29,471 0.96 21.0 21.8 22.3 21.5 3.4 3.6 4.81 -2.5 4.31 8.8 3.3 KFIMA 1.57 1.89 Buy 443 0.51 13.3 14.5 11.8 10.8 5.7 5.7 1.96 -19.9 1.56 0.6 0.0 KLK 25.22 26.18 Hold 26,858 0.73 120.7 126.3 20.9 20.0 2.4 2.5 25.50 -1.1 23.66 6.6 0.9 SIMEPLT 5.50 6.25 Buy 37,405 na 21.0 22.1 26.1 24.9 2.5 2.7 6.00 -8.3 4.58 20.1 -8.3 TSH 1.65 2.10 Buy 2,278 0.64 9.3 9.6 17.7 17.2 1.4 1.5 1.94 -14.9 1.56 5.8 0.0 UMCCA 6.43 6.73 Sell 1,348 0.34 22.8 34.8 28.2 18.5 2.6 2.8 7.08 -9.2 5.76 11.6 -1.2 GLOMAC 0.53 0.46 Sell 421 0.63 3.0 4.4 17.9 12.0 3.8 3.8 0.68 -21.7 0.52 1.9 -4.4 HUAYANG 0.61 0.58 Sell 213 0.83 0.7 3.4 92.6 17.8 0.8 0.8 1.21 -50.0 0.60 1.7 -0.8 IBRACO 0.71 0.92 Hold 350 na 9.1 12.4 7.7 5.7 5.7 7.1 0.98 -27.7 0.68 3.7 -13.5 IOIPG 1.99 2.02 Hold 10,957 0.83 16.5 16.3 12.0 12.2 3.0 3.0 2.22 -10.4 1.79 11.2 7.6 MAHSING 1.43 1.69 Buy 3,471 0.95 13.0 12.6 11.0 11.4 4.5 4.5 1.64 -12.8 1.38 3.6 -1.4 PLANTATIONS PROPERTY SIMEPROP 1.58 1.61 Sell 10,745 na 9.2 9.1 17.2 17.3 1.3 1.3 1.78 -11.2 1.04 51.9 -11.2 SNTORIA 0.62 0.76 Buy 350 0.24 8.3 8.6 7.5 7.2 1.6 1.6 0.91 -31.8 0.60 3.3 -10.8 SPB 4.86 5.28 Hold 1,670 0.67 21.2 26.1 23.0 18.6 2.5 2.5 5.50 -11.6 4.32 12.4 -0.8 SPSETIA 3.11 3.77 Buy 10,662 1.07 21.3 21.9 14.6 14.2 3.9 3.9 4.38 -29.0 3.07 1.3 -22.3 SUNWAY 1.77 1.74 Hold 8,665 0.87 11.9 12.6 14.9 14.1 2.8 3.4 1.96 -9.6 1.29 36.8 8.6 SUNREIT 1.73 1.87 Hold 5,095 0.86 10.0 10.7 17.2 16.2 5.8 6.2 1.90 -8.9 1.64 5.5 -8.9 CMMT 1.37 1.64 Buy 2,792 0.68 7.9 8.6 17.3 15.9 6.0 6.5 1.83 -25.1 1.35 1.5 -25.1 REIT POWER & UTILITIES MALAKOF 0.95 1.16 Buy 4,737 0.83 6.0 6.8 15.9 14.0 7.4 7.4 1.32 -28.0 0.86 10.5 -3.1 PETDAG 24.62 22.08 Sell 24,459 0.35 105.1 105.7 23.4 23.3 3.2 3.2 25.70 -4.2 21.00 17.2 1.5 PETGAS 17.90 19.10 Buy 35,419 0.83 98.8 99.5 18.1 18.0 3.9 3.9 21.04 -14.9 15.82 13.1 2.4 TENAGA 15.78 18.33 Buy 89,409 0.57 131.3 127.5 12.0 12.4 4.3 4.1 16.12 -2.1 13.00 21.4 3.4 YTLPOWR 1.25 1.17 Sell 9,717 0.79 9.6 10.1 13.0 12.4 4.0 4.0 1.50 -16.7 1.11 12.6 -3.1 TELECOMMUNICATIONS AXIATA 5.69 6.50 Buy 51,484 1.64 16.0 19.5 35.6 29.1 1.4 2.8 5.82 -2.2 4.24 34.2 3.6 DIGI 4.95 5.15 Hold 38,486 0.97 19.7 20.3 25.1 24.3 4.0 4.1 5.19 -4.6 4.36 13.5 -2.9 MAXIS 6.08 6.10 Hold 47,488 1.04 26.2 25.7 23.2 23.6 3.3 3.3 6.60 -7.9 5.48 10.9 1.2 TM 6.15 7.20 Buy 23,111 0.52 23.2 24.9 26.5 24.7 3.4 3.6 6.69 -8.1 5.85 5.1 -2.4 ELSOFT 2.70 2.70 Hold 743 0.76 15.0 15.7 18.0 17.2 3.9 4.1 2.95 -8.5 1.52 77.3 0.0 IRIS 0.22 0.25 Buy 531 2.21 0.6 0.7 38.9 32.2 0.0 0.0 0.25 -12.2 0.12 87.0 16.2 INARI 3.30 3.35 Under Review 6,803 0.97 14.2 15.9 23.3 20.8 3.0 3.4 3.82 -13.6 1.77 86.8 -2.9 TECHNOLOGY Semiconductor & Electronics Note: INARI proposed bonus issue shares on the basis of 1 for 2. For more detail please refer to 30.01.18 report. MPI 10.50 10.70 Sell 2,088 0.93 73.9 86.9 14.2 12.1 3.0 3.0 14.52 -27.7 8.16 28.7 -16.8 UNISEM 3.02 3.25 Sell 2,216 1.29 27.1 28.7 11.1 10.5 4.0 4.0 4.25 -28.9 2.52 19.8 -17.3 TRANSPORTATION Airlines AIRASIA 4.14 3.83 Buy 13,835 1.30 38.3 39.8 10.8 10.4 1.2 1.4 4.30 -3.7 2.50 65.6 23.6 AIRPORT 9.05 8.47 Sell 15,016 1.44 19.7 20.1 45.8 44.9 1.1 1.3 9.45 -4.2 6.15 47.2 3.0 Freight & Tankers PTRANS 0.29 0.44 Buy 365 na 2.3 3.6 12.7 8.1 2.4 3.7 0.38 -24.0 0.15 99.4 3.6 TNLOGIS 1.21 1.80 Buy 553 1.16 13.6 14.0 8.9 8.6 4.1 4.1 1.83 -34.0 1.20 0.8 -9.7 WPRTS 3.50 4.02 Hold 11,935 0.60 15.5 20.0 22.5 17.5 3.3 4.3 4.26 -17.8 3.34 4.8 -5.4 SNAPSHOT OF FOREIGN STOCKS UNDER COVERAGE Company Share Price Target Price (S$) (S$) Recom Market Cap. (S$m) Beta EPS (cent) FY18 FY19 PER (X) FY18 FY19 Div Yield (%) FY18 FY19 52week 52week % Chg High Price % Chg Low Price % Chg YTD BANKS & FINANCIAL SERVICES DBS 26.61 23.30 Sell 68,059 1.24 189.1 214.6 14.1 12.4 2.3 2.3 27.4 -2.9 18.12 46.9 7.1 OCBC 12.93 13.50 Buy 54,120 1.21 104.1 110.6 12.4 11.7 6.7 7.7 13.3 -2.9 9.37 38.0 4.4 UOB 27.85 26.90 Hold 46,316 1.07 215.4 229.3 12.9 12.9 2.5 2.5 28.5 -2.1 20.38 36.7 5.3 PLANTATIONS WILMAR 3.16 3.63 Hold 20,219 0.85 29.9 31.8 10.6 9.9 2.5 2.8 4.0 -20.6 3.06 3.3 2.3 IFAR 0.40 0.53 Hold 567 1.01 5.2 5.7 7.6 6.9 3.2 3.5 0.6 -31.9 0.37 8.2 1.3 BUY : Total return within the next 12 months exceeds required rate of return by 5%-point. HOLD : Total return within the next 12 months exceeds required rate of return by between 0-5%-point. SELL : Total return is lower than the required rate of return. Total Return is defined as expected share price appreciation plus gross dividend over the next 12 months. Gross dividend is excluded from total return if dividend discount model valuation is used to avoid double counting. Required Rate of Return of 7% is defined as the yield for one-year Malaysian government treasury plus assumed equity risk premium.
14. SECTOR UPDATE Friday , February 02, 2018 FBMKLCI: 1,868.58 THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Banking Sector Neutral 2017 Loans and Advances Grew by 4.1% YoY Li Hsia Wong Tel: +603-2167 9610 liwong@ta.com.my (Downgraded) www.taonline.com.my Below expectations Total loans and advances expanded by 4.1% in 2017, below 2016’s increase of 5.3% and sharply below our growth assumption of 5.6%. Despite the more positive momentum in the earlier part of 2017, poorer business loans in the 4Q led to the faster-than-expected easing in overall growth. The weaker loan growth came as a surprise despite broadbased strength in the economy where 3Q GDP surged to 6.2% YoY. With property and HP sales expected to remain lacklustre, we lower our 2018 loan growth forecast to 4.8% from 5.2% previously, underpinned by a 5.3% increase in consumer loans and 4.2% increase in business loans. Expectations that interest rates may hike by another 25 bps in the later part of 2018, could further dampen demand for loans especially in the consumer segment. Softer property and car sales dampened consumer loans By segment, 2017 consumer loans accelerated by 5.5%, below our 6.2% forecast due to softer property loans and weaker-than-expected car sales as TIV contracted by 0.6% YoY. Accounting for 54% of total loans in the system, the increase in consumer loans was largely supported by residential mortgages, which climbed 8.9% YoY (+0.7% MoM). Loans for the purchase of passenger cars resumed its downward momentum, contracting 1.1% YoY and 0.2% MoM. Advances for credit cards was encouraging, widening at a healthier pace of 3.0% YoY (+2.8% MoM) and ending 2017 above our forecast of 1%. Businesses adopt wait-and-see approach Growth in business loans was disappointing. Broadening by only 2.5% YoY (+1.9% MoM), we estimate that SME loans widened at an even softer pace of 1.3% YoY (vs. +2.0% YoY in November) while other business loans increased by 3.1% YoY and 2.4% MoM. Driving weaker business loans, we believe that in addition to stronger repayments, some larger corporates tapped the capital market for alternative funding options while many businesses also adopted the wait-and-see attitude due to the upcoming general election. By sub-segment, we note yearly demand for working capital decelerated to 0.9% YoY (vs. +2.2% YoY in November). By sector, sustained contractions in mining and quarrying (-20.1% YoY, +11.7% MoM) as well as softer loans to the manufacturing, transport, storage and communications and agriculture, education and finance, insurance and business activities muted the stronger yearly increases in electricity, gas and water supply, construction and real estate. Softer applications but approvals remain on an upward momentum Loan applications took a tumble in December (-2.1% YoY, -30.8% MoM), breaking five months of consecutive increases. Seasonally, we believe the decline was partly underpinned by the holiday shortened month as application for business loans contracted by 40.9% MoM (-10.8% YoY). Applications in the consumer segment also plunged 21.0% MoM (+5.4%% YoY). Compared to a year ago, application for credit cards (-2.3% YoY, -12.2% MoM) and loan to buy passenger cars (11.5% YoY, -5.2% MoM) slipped both yearly and sequentially. Meanwhile, applications for the purchase of residential mortgages strengthened, widening 9.4% YoY (-25.2% MoM). Total loans approved staged another month of growth, after rebounding in November following 2 straight months of contraction. Total loans approved in December surged 15.4% YoY although sequentially, total loans approved declined 7.7%. Better YoY loan approvals were supported by increases in both the business (+17.7% YoY, +11.8% MoM) and consumer segments. Consumer approvals resumed its upward momentum, rising 12.6% YoY (-24.0% MoM). Overall approval Page 1 of 3
15. 2-Feb-18 rate accelerated to 59 .2% from 50.2% a year ago as business and consumer loans approval rates increased to 77.7% and 45.7% from 58.9% and 42.7% a year ago. By major sub-segments, approval for the purchase of residential properties and non-residential properties stood at 46.1% and 45.1% vs. 44.2% and 29.6% in November. Seasonally softer loan repayments Yearly repayments slipped 2.5% YoY (-1.5% MoM) in December after maintaining a healthy momentum where YoY repayments climbed for 10 straight months from February to November. The banking system’s net impaired loans ratio improved to 1.1% from 1.2% in November while loan loss provisions stood at 82.9% from 84.0% in November. During the month, the gross impaired loans (GIL) ratios for residential properties and credit cards improved 10 bps to 1.0% and 1.1% while the purchase of passenger cars, personal loans and non-residential properties stood unchanged at 0.8%, 2.2% and 1.1%. By segment, the GIL ratio for manufacturing strengthened to 3.6% (November 2017: 4.1%) while the GIL ratio for construction and wholesale, retail and trade stood unchanged at 2.2% and 2.1%. By purpose, the GIL ratio for loans taken for working capital also improved to 2.2% from 2.4% in November. Deposits strengthened on higher CASA, stable average lending rates Total deposits (excl. Repo) advanced by 3.9% YoY (-0.1% MoM). CASA balances in commercial banks maintained its upward momentum for the 15th month, increasing 9.7% YoY (+4.0% MoM). The CASA ratio climbed to 28.2% from 26.6% a year ago. The loan to deposit (LD) ratio stood at 90.7% (December 2016: 90.5%) while the liquidity coverage ratio (LCR) strengthened to 134% from 124% a year ago. Elsewhere, the average 1 and 12 months fixed deposit rates stood little changed at 2.87% and 3.10%. The average lending rate softened 1 bp MoM to 5.22%. Elsewhere, the banking system’s capital buffers remained ample with CET1 and Total Capital Ratio of 13.3% and 17.1%. Reduce to NEUTRAL We reduce our sector recommendation to NEUTRAL as the recent rally in share prices has narrowed the potential TP upside for many stocks under our coverage. In 2018, while we are projecting for softer loan growth of 4.8% vs. 5.2% earlier, we foresee several upside catalysts for the sector. Warranting potential upwards earnings revisions: 1) business loans could accelerate post GE on the back of improvement in optimism, 2) second hike in the OPR, thus helping to alleviate competitive pressures on NIM, and 3) continued resilience in asset quality as many Malaysian banks do not expect the MFRS 9 to have material impact. Muting growth prospects, we foresee more easing in consumer loans as car sales and the property market are expected to remain dull. In the meantime, the banking system’s asset quality remains intact, backed by better gross impaired loans ratio of 1.1% and LCR in excess of 100%. [ TH E RE M A ININ G OF T H IS P A GE IS IN TE N TI O NA L L Y L E F T BL AN K] Page 2 of 3
16. 2-Feb-18 Peers Comparison Maybank CIMB Public Bank Hong Leong AMMB RHB Bank Alliance Affin Simple average Price (RM) 10.10 7.25 21.98 18.60 4.82 5.44 4.33 2.53 TP (RM) 10.50 7.50 25.10 19.30 5.50 5.70 4.60 2.70 Capital upside (%) 4.0% 3.4% 14.2% 3.8% 14.1% 4.8% 6.2% 6.7% P/BV FY17 FY18 FY19 (x) (x) (x) Maybank 1.3 1.4 1.4 CIMB 1.4 1.3 1.2 Public Bank 2.3 2.1 1.9 Hong Leong 1.7 1.6 1.6 AMMB 0.9 0.9 0.8 RHB Cap 1.0 0.9 0.8 Alliance 1.3 1.3 1.2 Affin 0.6 0.5 0.5 Simple average 1.3 1.2 1.2 Source: TA Research, Bursa Malaysia, Bloomberg HOLD HOLD BUY HOLD BUY HOLD HOLD HOLD FY17 (%) 10.3 9.5 14.8 10.2 8.5 9.0 10.8 5.2 9.8 Mkt Cap RM mil 108,722 66,885 84,876 38,046 14,528 21,814 6,703 4,916 43,311 ROE FY18 (%) 10.0 10.8 14.1 11.2 8.8 8.6 9.4 5.2 9.8 FY19 (%) 10.5 9.7 13.7 11.5 8.9 8.3 10.5 5.8 9.9 FY17 (%) 9.2 26.1 1.8 12.7 1.7 20.7 (1.9) (19.2) 9.9 Profit growth FY18 (%) 3.6 4.4 3.8 8.9 10.5 3.1 (7.6) 3.3 4.4 FY17 (%) 1.0 0.9 1.4 1.1 1.0 0.8 0.9 0.7 1.0 ROA FY18 (%) 1.0 1.0 1.4 1.2 1.1 0.8 0.9 0.7 1.0 FY19 (%) 9.7 10.1 5.2 5.9 7.1 3.1 16.5 15.9 7.9 FY19 (%) 1.0 0.9 1.3 1.2 1.1 0.8 0.9 0.7 1.0 FY17 (x) 14.8 14.9 16.0 17.7 11.0 10.8 13.1 10.8 13.6 FY17 (%) 5.0% 3.4% 2.5% 2.4% 3.7% 2.8% 3.7% 3.2% 3.3% PER FY18 (x) 14.3 14.3 15.4 16.3 9.9 10.4 14.2 10.4 13.2 FY19 (x) 13.0 12.9 14.7 15.4 9.3 10.1 12.2 9.0 12.1 Div yield FY18 (%) 5.0% 3.5% 2.6% 2.4% 3.7% 2.8% 3.7% 3.2% 3.4% FY19 (%) 5.0% 3.9% 2.7% 2.4% 3.7% 2.8% 3.7% 3.2% 3.4% Sector Recommendation Guideline OVERWEIGHT: The industry, as per our coverage universe, is expected to outperform the FBMKLCI over the next 12 months. NEUTRAL: The industry, as per our coverage universe, is expected to perform in line with the FBMKLCI over the next 12 months. UNDERWEIGHT: The industry, as per our coverage universe, is expected to underperform the FBMKLCI over the next 12 months. Stock Recommendation Guideline BUY : HOLD : SELL : Not Rated: Total return within the next 12 months exceeds required rate of return by 5%-point. Total return within the next 12 months exceeds required rate of return by between 0-5%-point. Total return is lower than the required rate of return. The company is not under coverage. The report is for information only. Total Return is defined as expected share price appreciation plus gross dividend over the next 12 months. Gross dividend is excluded from total return if dividend discount model valuation is used to avoid double counting. Required Rate of Return of 7% is defined as the yield for one-year Malaysian government treasury plus assumed equity risk premium. Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. As of Friday, February 02, 2018, the analyst, Wong Li Hsia, who prepared this report, has interest in the following securities covered in this report: (a) nil Kaladher Govindan – Head of Research TA SECURITIES HOLDINGS BERHAD (14948-M) A Participating Organisation of Bursa Malaysia Securities Berhad Menara TA One 22 Jalan P. Ramlee 50250 Kuala Lumpur Malaysia Tel: 603 – 2072 1277 Fax: 603 – 2032 5048 www.ta.com.my Page 3 of 3
17. RESULTS UPDATE Friday , February 02, 2018 FBMKLCI: 1,868.58 Sector: Oil & Gas THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* TP: RM6.10 (+13.8%) Lotte Chemical Titan Holding Bhd Last Traded: RM5.36 Sustained Sequential Momentum & Dividend Surprise Kylie Chan Sze Zan Tel: +603-2167 9601 kyliechan@ta.com.my BUY www.taonline.com.my Review Lotte Chemical Titan Holding Bhd’s (TTNP) FY17 core net profit of RM1.1bn (-21% YTD) exceeded our expectations but was within consensus forecast at 112% and 102% of full-year forecasts respectively. Share Information FY17 DPS of 23 sen surprised on the upside as it exceeded management’s initial guidance of 50% payout after deduction of plant maintenance costs (FY17 estimate: RM300mn-400mn). Moving forward, management was tight-lipped on the sustainability of this bumper payout. Nevertheless, we note that the group’s net cash position of RM3.6bn (with zero borrowings) translates to strong dividend capacity. Market Cap (RMmn) QoQ earnings momentum (4Q17: +56%, 3Q17: +35%) sustained its sterling recovery, after a disappointing 2Q17 (-41% QoQ). This was on the back of progressive improvement in plant utilisation (PU) rates to 86% (3Q17: 77%, 2Q17: 71%). As a result, pretax profits received a boost of RM110mn. Additionally, 4Q17 profit growth was also catalysed by: 1) higher product prices, 2) gain on interest swap at associate LC USA, and 3) 3Q17 included a write-off for NC1 cracker’s turnaround. Recall that 2Q17 was impacted by a water supply interruption incident that resulted in production loss of 75,000 mt. On top of that, 4Q17 PU recovery was also due to the absence of major statutory turnaround at TTNP’s naphtha crackers. To recap, both crackers were shut down for maintenance in 1Q17-3Q17 for more than 80 days collectively. Nevertheless, cracker loads have since normalized to full capacity in 4Q17. Additionally, PU would have been higher, if not for the group’s decision to temporarily halt production at Indonesian PE (polyethylene) plants in 2H17 until product spreads recover. Bloomberg Code TTNP MK Stock Code 5284 Listing Main Market Share Cap (mn) 2,273 12,183 52-wk Hi/Lo (RM) 6.53/4.14 12-mth Avg Daily Vol ('000 shrs) 4,302.8 Estimated Free Float (%) 26.4 Beta Major Shareholders (%) n.a. Lotte Group - 73.6% Forecast Revision (%) FY18 Forecast Revision (%) FY19 -5 -5 Core Net Profit (RM mn) 1,280.3 1,384.0 Consensus 1,296.6 1,442.4 98.7 96.0 TA/Consensus (%) Previous Rating Buy (Maintained) Scorecard % of FY vs TA 112 Above vs Consensus 102 Within Financial Indicators Net Debt/Equity (x) FY18 FY19 Net Cash Net Cash ROA (%) 9.3 9.3 ROE (%) 10.4 10.5 NTA/Share (RM) 6.2 6.6 P/NTA (x) 0.9 0.8 Share Performance All in all, YTD earnings weakness was attributed to: 1) water supply interruption, 2) statutory turnaround at naphtha crackers, 3) expensive inventory in 2Q17 carried forward from 1Q17, 3) lagged product and feedstock effect in 2Q17, and 4) write-down of inventories in 2Q17. Key Takeaways from Conference Call Management is optimistic that product spreads will remain resilient despite the nascent recovery of oil price. This is because product prices are expected to rise in tandem with more expensive naphtha feedstock. Price Change (%) TTNP FBMKLCI 1 mth 12.8 3 mth 3.5 6.9 6 mth 21.3 6.2 12 mth 4.0 n.a. 11.8 (12-Mth) Share Price relative to the FBMKLCI Following the successful commissioning of TE3 fluidized naphtha cracker on 16-Dec-17, development of other new plants are also on track (Figure 1). Source: Bloomberg Page 1 of 4
18. 2-Feb-18 Figure 1 : Projects Update Source: Company Impact We include contribution from TTNP’s US operations (target start: 2H19), comprising:- 1) effective 36% stake in a shale gas based ethane cracker (capacity: 1,000mt p.a.), and 2) 40% stake in a MEG plant (capacity 700mt p.a.). Other major changes to our earnings forecasts include:- 1) lowering 201819 exchange rate to USDMYR4.00 (previous: 4.10); 2) incorporating FY17 annual unaudited figures, 3) increasing tax rate for FY18-19 as management guided that tax rates will normalize from FY18 onwards, given that the bulk of investment tax allowances have been utilized. As a result of the changes above, our FY18-19 forecasts are lowered by 5%. Valuation Following the earnings revisions, our TP for TTNP is lowered to RM6.10 (previous: RM6.34) based on unchanged 7x FY18 EV/EBITDA. We remain buyers of TTNP, premised on multi-year capacity expansion, strong balance sheet, attractive valuations, and robust margins due to subdued oil price. Furthermore, we believe TTNP has now regained investor confidence after 2Q17’s water blunder. This is following sustainable and stable operations achieved in 2H17. Firm pipeline capacity growth plans include:- 1) 2018: naphtha cracker (+354 ktpa), 2) 2018-19: polypropylene (+200ktpa, 3) 2019: shale cracker (+360 ktpa) and MEG (+280 ktpa), and 4) 2023: naphtha cracker (+1mn tpa) and integrated facility at Indonesia Page 2 of 4
19. 2-Feb-18 Table 1 : Earnings Summary FYE Dec (RM mn) Revenue E B ITDA E B ITDA ma rg in P reta x P rofit 2016 (% ) Reported Net P rofit Core Net P rofit Core E P S (s en) Core E P S g rowth (% ) PER DP S Dividend Yield 2017 2018E 2019F 2020F 8,136.6 2,196.8 27.0 1,710.2 7,824.3 1,594.6 20.4 1,140.6 8,818.8 1,995.4 22.6 1,559.4 9,420.1 2,109.4 22.4 1,727.9 9,861.3 2,190.5 22.2 1,799.7 1,315.4 1,391.1 60.3 104.0 1,064.9 1,093.7 55.0 (8.7) 1,280.3 1,280.3 64.4 17.1 1,384.0 1,384.0 69.7 8.1 1,441.5 1,441.5 72.6 4.2 8.3 25.0 4.7 7.7 27.0 5.0 7.4 29.0 5.4 (x) (s en) (% ) 8.9 0.0 0.0 9.7 23.0 4.3 Table 2: FY17 Results Analysis Cumulative YE 31 Dec Revenue 4Q17 2,117.3 3Q17 QoQ FY16 YoY 2,146.4 (1.4) 7,824.3 8,136.6 (3.8) 29.0 598.7 (22.6) 1,594.6 2,196.8 (27.4) 463.3 359.1 (111.7) (109.8) Finance Costs 24.7 (4.0) >100 Associates 1.2 (18.6) EI 4.4 (9.3) Minority Interest FY17 5.0 Depreciation Taxation YoY 2,016.2 EBITDA Pretax Profit 4Q16 381.9 244.9 (5.1) 1.7 (96.0) 16.3 (434.5) (434.5) 0.0 (15.1) 0.8 (1.4) >100 (15.2) >100 (0.9) >100 (35.8) (5.3) >100 >100 (77.1) >100 (26.4) (75.7) (65.2) 56.0 423.2 (14.8) (65.6) (132.1) >100 0.0 (9.8) (96.2) (77.0) (394.1) 1.3 0.2 230.3 64.2 291.1 29.9 1,064.9 1,315.4 (19.0) Core Net Profit 373.8 239.6 56.0 368.2 1.5 1,093.7 1,391.1 (21.4) Core EPS (sen) 16.4 10.8 51.7 21.3 55.0 38.2 DPS (sen) 23.0 (22.8) 23.0 (0.7) (33.3) (80.5) 378.2 - 1.3 1,710.2 Reported Net Profit - nm 1,140.6 >100 44.3 - EBITDA Margin 22% 18% 28% 20% 27% Core Net Margin 18% 12% 17% 14% 17% Table 3: FY17 Segmental Analysis YE 31 Dec (RM mn) 4Q17 3Q17 4Q16 502.9 311.4 399.4 QoQ% YoY% 61.5 25.9 FY17 FY16 YoY% Revenue Olefins & Derivatives 1,528.3 1,657.3 (7.8) Polyolefins 1,614.4 1,704.5 1,605.7 (5.3) 0.5 6,296.0 6,479.3 (2.8) Group 2,117.3 2,015.9 2,005.1 5.0 5.6 7,824.3 8,136.6 (3.8) 99.7 45.9 60.7 >100 64.3 232.1 226.0 281.9 202.8 379.9 39.0 (25.8) 912.9 1,070.7 PBT Olefins & Derivatives Polyolefins Eliminations Group 0.3 381.9 (3.8) 244.9 0.0 440.6 >-100 56.0 nm (13.3) (4.4) 1,140.6 (26.9) 1,291.6 2.7 (14.7) (83.6) (11.7) PBT margin Olefins & Derivatives 20% 15% 15% 15% 14% Polyolefins 17% 12% 24% 14% 17% Group 18% 12% 22% 15% 16% Page 3 of 4
20. 2-Feb-18 (TH I S P A GE IS IN TE N TI ON AL L Y L E F T B L AN K ) Stock Recommendation Guideline BUY : HOLD : SELL : Not Rated: Total return within the next 12 months exceeds required rate of return by 5%-point. Total return within the next 12 months exceeds required rate of return by between 0-5%-point. Total return is lower than the required rate of return. The company is not under coverage. The report is for information only. Total Return is defined as expected share price appreciation plus gross dividend over the next 12 months. Gross dividend is excluded from total return if dividend discount model valuation is used to avoid double counting. Required Rate of Return of 7% is defined as the yield for one-year Malaysian government treasury plus assumed equity risk premium. Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. As of Friday, February 02, 2018, the analyst Kylie Chan Sze Zan who prepared this report, has interest in the following securities covered in this report: (a) nil Kaladher Govindan – Head of Research TA SECURITIES HOLDINGS BERHAD (14948-M) A Participating Organisation of Bursa Malaysia Securities Berhad Menara TA One 22 Jalan P. Ramlee 50250 Kuala Lumpur Malaysia Tel: 603 – 2072 1277 Fax: 603 – 2032 5048 www.ta.com.my Page 4 of 4